If the SEC thinks even utility tokens will be classified as securities, then the rules surrounding the thousands of ICO advisory services (especially those not licensed as investment bankers) are likely to change drastically — and change soon.
Take some time to peruse Linkedin profiles in search of how many “ICO Advisors” and “Blockchain Experts” have arisen in the last six months. The numbers will astound you. As of this writing, there are some 7,641 individuals who are tied to ICOs. While the ecosystem here is expanding rapidly, there are several issues inherent with many would-be advisors to coin and token offerings.
First, most are not registered to sell securities or advise on securities transactions. Given recent moves by the SEC, the writing on the wall is clear–regulation is coming. The good news is that it is likely not to look much different in structure and rules than the current regulation. The bad news is that it is likely no to look much different in structure and rules than the current regulation. It will likely look more similar to current exemption laws, which many of the more recent ICOs have already been attempting to following.
The current laws will include restrictions on issuers, investors and the advisors to the deals in at least some of the following ways:
Many coin and token offerings are not structured properly enough to protect investors in the long term. This is one of the reasons I argue that we should just assume these products are securities from the outset AND offer equity in an initial coin offering. In addition, investor protection requires regulation. Regulation requires oversight. Oversight means licensing of advisors and those assisting throughout the process. There will be legitimate ICOs heading into the future. In fact, I think many of the best ICOs are yet to come. However, as the process becomes more legitimized so will the advisors to the deals, which in this case means licensed investment bankers.
What do you think? Is there a world where ICO advisors are not registered? If so, how will it work?